Unregulated SCS/SCSp
Practical usePrivate equity fund, venture capital fund,
real estate fund, private debt fund, crypto fund , ESG fund / Impact investing fund, infrastructure fund,
pledge fund, micro finance fund, socially responsible fund, tangible assets fund, dedicated family office structure
Applicable legislationLaw of 10 August 1915 ("Company Law")
Authorisation and supervision by the CSSFNo
Qualification as an AIFNon-AIF, unless
activities fall within
the scope of article 1
(39) of the AIFM Law.
Exemption
from AIFMD
full regime
under lighter
regime (AIFMD
registration
regime)
Possible.
External
authorised
AIFM
requirement
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Eligible investorsUnrestricted.
Eligible assetsUnrestricted.
Risk diversification requirementsUnrestricted.
Legal Form• SCS
• SCSp
Umbrella structureNo
Capital requirementsNo minimum capital requirement.
Required Luxembourg service providersFor SCS:
• Alternative
Investment Fund
Manager (if the SCS
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCS qualifies
as an AIF and is
managed by a duly
authorised AIFM).
For SCSp:
• Alternative
Investment Fund
Manager (if the SCSp
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCSp qualifies
as an AIF and is
managed by a duly
authorised AIFM).
Possibility of listingIn principle no. The
SCS/SCSp may
however issue debt
securities that are
eligible to be listed on
the stock exchange.
European passportNon-AIF, unless activities fall within the scop of article 1 (39) of the AIFM Law.
Net asset value (NAV) calculation and redemption policyNot required.
Corporate income taxNo corporate income tax applicable. Municipal business tax of 6.75% applicable in very limited circumstances,
namely in case the
SCS/SCSp (i) carries out a commercial
activity or (ii) is
deemed to carry out a commercial activity.

A SCS/ SCSp is
deemed to carry out a commercial activity if its general partner is a
Luxembourg public or private limited liability company holding at least 5% of the partnership interests.

With a proper
structuring of the
GPs partnership
interest it should be possible to avoid the deemed commercial characterisation of
the SCS/SCSp.
Subscription taxNo subscription tax.
Wealth taxNo wealth tax.
Withholding tax on dividends / interests and capital gainsNot subject to withholding tax.
Benefit from double tax treaty networkNo
Benefit from the EU Parent Subsidiary DirectiveNo
Thin capitalization rules (debt-to-equity ratio)No debt-to-equity ratio.

Luxembourg has enhanced its existing limited partnership regime, adding the special limited partnership to its range of investment vehicles designed for the alternative investment industry, including private equity. The authorities have adopted a pragmatic and business-friendly approach to meet the most stringent requirements of alternative fund managers. We summarise below the main legal and tax rules applicable to both regulated and unregulated Luxembourg common limited partnerships and special limited partnerships.

The Luxembourg limited partnership is an entity established for a limited or unlimited period of time either as a common limited partnership (société en commandite simple or SCS) or a special limited partnership (société en commandite spéciale or SCSp), by one or more unlimited partners with joint and unlimited liability, or by one or several limited partners liable up to the value of their contributions.

Contributions to the limited partnership may be made in cash, in kind or other means such as services under the terms and conditions of the limited partnership agreement, and may be freely determined by the partners. In contrast to other Luxembourg legal entities, contributions in the form of services do not require an external valuation report, and their value may be determined by private agreement. In addition, unlike most common corporate structures under Luxembourg law, the limited partnership does not impose any minimum capital requirements.

Partnership interests, representing contributions to the limited partnership, may or may not be represented by securities. In a limited partnership that does not issue securities to its investors, each limited partner has a capital account, an equity account in the accounting records of the limited partnership. It typically varies according to the initial and subsequent contributions by partners, profits and losses recorded by the limited partnership and allocated to the partners under the LPA, and distributions to the partners.

The main difference between the common and special limited partnerships is that the former has a legal personality distinct from that of its partners, whereas the special limited partnership does not have legal personality, making it very similar to the limited partnership under English law.

The features of the limited partnership make this entity a very attractive new addition to the Luxembourg investment toolbox.

The limited partnership may be used for master-feeder structures, as an acquisition vehicle, or for joint ventures, but its most frequent use is for private equity, venture capital and real estate investments. The popularity of the limited partnership for private equity investments is down to the high level of contractual or corporate flexibility provided by its legal form, which is familiar to Anglo-Saxon investors and promoters due to its resemblance to the English limited partnership.

As a general rule, the limited partnership does not automatically fall under the definition of an alternative investment fund (AIF), but it may take the form of a collective investment undertaking with multiple compartments that raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for their benefit, and does not require authorisation under the UCITS regime.

Under these circumstances, the limited partnership qualifies as an AIF in accordance with the 2013 legislation on alternative investment fund managers and may carry out its activity either as an entity regulated by the Financial Sector Supervisory Authority (CSSF) under the SIF or SICAR legal regime, or as an unregulated entity. Irrespective of whether it is regulated or unregulated, the AIF must appoint an alternative investment fund manager (AIFM) that may be registered or authorised depending on the value of its portfolio of AIF assets under management.

From a corporate structure perspective, if the SCS qualifies as an AIF and it is internally managed, the SCS itself will be authorised or registered as an AIFM. If, however, the SCS appoints an external AIFM, the general partner or third-party AIFM must be registered or authorised under the 2013 legislation.

The SCSp, on the other hand, may not be authorised as an internally managed AIF due to its lack of legal personality, so it must appoint an external entity (which may be its unlimited partner acting as the general partner or another company) as external AIFM.

The main practical steps in establishing a limited partnership as an alternative investment fund (AIF) are:

  • Incorporating the general partner.
  • Executing a limited partnership agreement (LPA) by means of a private or notarial deed.
  • Engaging the required service providers, subject to the regulated or unregulated status of the limited partnership.
  • Publishing the required extract from the limited partnership agreement in the Luxembourg Trade and Companies Register.
  • Establishing a register of partnership interests.
  • Requesting the registration or authorisation of the AIFM by the CSSF.

The limited partnership is managed by one or more managers who do not necessarily have to be unlimited partners. In practice, however, the unlimited partner is often the manager of the limited partnership.

Where management of the limited partnership is not entrusted to the unlimited partner, the liability of the manager is governed by the general provisions applicable to board members provided by the 1915 law on commercial companies. These stipulate that the manager of the limited partnership is responsible for execution of the mandate and for any misconduct in the management of the limited partnership, and is jointly and severally liable toward the limited partnership and third parties for damages stemming from breach of the law or the LPA.

Subject to the provisions of the LPA, the manager of a limited partnership may delegate the management to a third party, which will be liable only for the performance of its own mandate.

Contractually agreed restrictions regarding the powers of managers cannot be applied in relation to third parties, even if published in the Luxembourg Trade and Companies Register. However, the LPA may authorise one or more managers to represent the limited partnership, either jointly or individually, and such a clause is valid with regard to third parties, subject to publication formalities.

The acts of the managers may bind the limited partnership even if they exceed the corporate purpose mentioned in the LPA, unless it can be proven that the third party was aware that the act was outside the scope of the corporate purpose or if, in the context, the third party could not have been unaware of such circumstance.

Distributions in a SCSp

The limited partnership legal regime allows partners to tailor their participation in profits and losses, as well as distributions, as they deem appropriate in the LPA. If the constitutive deed of the limited partnership does not provide any rules in this respect, each limited partner shall participate proportionally to the subscription of its partnership interests.

The limited partnership may distribute profits or reimburse partnership interests, as contractually agreed in the LPA. The freedom provided by the legal provisions governing the LPA allow partners of private equity partnership agreements to structure any clawback provisions regarding the general partner or the limited partners in line with agreed commercial terms.

Voting rights in a SCSp

Unless provided otherwise in the LPA, as a general rule the voting rights of each partner are proportional to their partnership interests.

Decision-making process in a SCSp

The decision-making process may also be tailored by the provisions of the LPA and the agreement may list resolutions that do not require a decision by the partners. However, certain aspects must be decided upon by the partners, namely the corporate purpose, a change of nationality, conversion of legal form or liquidation of the limited partnership.

The formalities and conditions for passing resolutions should be determined in the LPA, otherwise the rules are as follows:

  • Written consultations and vote in writing: resolutions of the partners shall be adopted at general meetings by means of consultation in writing; before such consultations, each partner shall receive the precise text of the resolutions and express their vote in writing.
  • Majority of votes rule: decisions shall be validly adopted by a majority of votes expressed irrespective of the portion of partnership interests represented, except for amendments regarding the corporate purpose, change of nationality, conversion of legal form or the liquidation of the limited partnership, which require the consent of partners representing three-quarters of the partnership interests and of the unlimited partner.
  • Partners representing more than half of the partnership interests may convene a meeting.

Transfer of partnership interests in a SCSp

Unless otherwise stated in the LPA, the transfer, dismemberment or pledge of limited partnership interests is subject to the approval of the unlimited partner. If the LPA does not contain any provisions in this regard, the transfer, dismemberment or pledge of partnership interests of the unlimited partner is subject to the consent of the limited partners, who shall deliberate according to the rules regarding amendment of the LPA. Transfers by cause of death do not require approval in either case.

Liability of limited partners in a SCSp

The unlimited partner has unlimited and joint liability for the obligations of the limited partnership, while limited partners’ liability is restricted to the amount of their subscribed partnership interests.

In general, limited partners are forbidden to carry out any acts of external management – acts performed for the account of the limited partnership with third parties. However, it is not forbidden for the limited partner to perform acts of internal management that are internal to the limited partnership.

An act of external management triggers unlimited liability on the part of the limited partner toward third parties, although not toward other members of the limited partnership. In these circumstances the limited partner in question may become jointly and severally liable toward third parties for any obligations of the limited partnership in which it was involved through acts of management.

The scope of the joint liability of the limited partner in these circumstances depends on its involvement in the management of the limited partnership. An isolated rather than regular act of external management will result in liability only for the commitments or obligations of the limited partnership in which it has taken part. A limited partner that has regularly performed acts of management involving third parties may be liable to those third parties even for commitments or obligations in which it did not take part.

Luxembourg’s 1915 law on commercial companies provides a non-exhaustive list of actions that do not constitute acts of external management triggering a limited partner’s liability towards third parties: exercising partner prerogatives; providing advice to affiliated entities, managers of the limited partnership or to the limited partnership itself; oversight or control functions; granting loans, guarantees or securities, or any other type of financial assistance; and approving acts outside the duties of the managers.

Limited partners may as a rule carry out any acts of internal management and in general any acts that would not mislead a reasonable third party regarding the scope of the involvement of the limited partner, including voting on any issues subject to their consent under the LPA such as amendments to the agreement, extension of the partnership’s duration, winding up of the partnership or removal of a manager, or acting or being represented on any internal body of the limited partnership, such as an investment committee or advisory board, even if the body has a power of decision over actions taken by the partnership.

The commercial companies legislation also states that a limited partner will not lose its limited liability by acting as director or agent of a manager of the limited partnership, even if the manager is an unlimited partner, or may execute documents on behalf of a manager, in its capacity as a representative of the limited partnership. However, this safe harbour provision requires the capacity in which the limited partner is acting to be clearly indicated.

The 1915 law also authorises a limited partner to conduct transactions with the limited partnership without its rank as privileged or general creditor being affected by its capacity as a limited partner. For example, a limited partner lending money to the partnership will have the same ranking as a creditor of the limited partnership as external entities.

Direct taxation of a SCSp

Unregulated SCS and SCSp are tax-transparent entities for corporate income tax and net worth tax purposes.

Municipal business tax of 6.75% may become applicable in the event that the limited partnership carries out any commercial activity, or is deemed to be doing so. The limited partnership is deemed to be carrying out a commercial activity if its general partner is a Luxembourg public or private limited liability company holding at least 5% of the partnership interests. However, proper structuring of the general partner partnership interest should ensure the limited partnership will not be deemed to be carrying out a commercial activity.

The Luxembourg direct taxation authority has clarified in the circular of January 9, 2015 that unregulated SCS or SCSp qualifying as an AIF within the meaning of the law of 2013 on alternative investment fund managers are deemed not to be performing a commercial activity. Therefore, an unregulated SCS or SCSp that is an AIF will be completely tax-neutral, provided that no general partner is a Luxembourg company holding 5% or more of the partnership interests.

Finally, as tax-transparent entities, neither SCS nor SCSp benefit from Luxembourg’s double taxation avoidance treaties, nor from the EU’s Parent-Subsidiary Directive (2011/96/EU).

VAT

Management services provided to an SCS or SCSp that qualifies as an AIF are exempt from value-added tax.

Luxembourg withholding tax on dividends

Dividend distributions made by a SCS or SCSp to resident or non-resident partners are not subject to withholding tax in Luxembourg.

Contractual flexibility of a SCSp

One of the main advantages offered by the limited partnership is the contractual freedom of the parties. Apart from a limited number of statutory provisions, there is great flexibility in determining the rules governing the functioning of the limited partnership.

Short time to market of a SCSp

The ability to incorporate the limited partnership under private deed and the absence of cumbersome registration formalities allows the investment vehicle to be brought to market in less than a month.

No minimum capital requirement or minimum investment

The incorporation of the limited partnership does not impose any legal minimum capital, in contrast to Luxembourg private and public limited liability companies, making the limited partnership an attractive vehicle for venture capital investment. Furthermore, the LPA may permit subscriptions from all types of investor without minimum investment requirements.

Low launch costs of a SCSp

Unregulated status, the ability to incorporate the entity by private deed, and the absence of the requirement to appoint a depositary (except if the limited partnership qualifies as an AIF and is managed by an authorised or registered AIFM) make the limited partnership a less expensive option than other investment vehicles on the market.

Confidentiality 

The information to be published in the Luxembourg Trade and Companies Register is limited to the name of the limited partnership, its duration, the unlimited partner and the managers, including their signatory powers. The identity of the limited partners does not have to be disclosed.

A Luxembourg special limited partnership (SCSp) can invest in any asset. They can be used for the structuring of funds such as a private equity fund, venture capital fund, real estate fund, private debt fund, crypto fund, ESG fund / impact investing fund, infrastructure fund, pledge fund, micro finance fund, socially responsible fund, tangible assets fund or as a dedicated family office structure.

Our team:

  • supports you in finding the suitable vehicle to meet your requirements and your goals from a marketing, regulatory and legal perspective;
  • introduces you to the suitable service providers to meet your requirements;
  • provides assistance with the establishment of the vehicle (i.e. drafting of the LPA, drafting and deposit of the extract of the LPA with the Luxembourg Trade and Companies Register, etc.);
  • provides corporate support services throughout the lifetime of your vehicle;
  • provides advice on AIFMD related issues;
  • provides advice to sponsors on local private placement rules for marketing their vehicle in Luxembourg;
  • keeps you up to date on new legal and regulatory developments.

For further information, please contact Olivier Sciales at oliviersciales@cs-avocats.lu.

Compare two vehicles:


 UCITSUCISIFSICARRAIFSPFSecuritization vehicleUnregulated SCS/SCSpSOPARFI
Practical useHighly regulated vehicle which can
be sold to all types of investors and
cross-border into any other EU
Member State.
Investment funds which do not meet
the criteria set by the EU Directives.
Hedge funds, private equity fund, venture capital fund, real estate fund,
infrastructure fund,
distressed debt fund, microfinance fund,
socially responsible
investment fund,
tangible assets fund
and any other type of
alternative funds.
Private equity and
venture capital
transactions.
Hedge funds, private
equity and venture capital
funds, real estate funds,
infrastructure funds,
distressed debt funds,
Islamic finance funds,
microfinance funds,
socially responsible
investment funds, tangible
assets funds and any other
type of alternative funds.
Individuals wishing
to optimise their
personal tax
planning (private
wealth management
purposes).
• True sale
and synthetic
securitisations.
• Securitisation
of a portfolio of
securities.
• Securitisation
as structure for intra
group financing
activities.
• Securitisation of
non-performing loans.
• Securitisation of
leasing receivables.
• Real estate securitisations (project financing and real estate financing)
Private equity fund, venture capital fund,
real estate fund, private debt fund, crypto fund , ESG fund / Impact investing fund, infrastructure fund,
pledge fund, micro finance fund, socially responsible fund, tangible assets fund, dedicated family office structure
Holding and financing
activity, commercial
activity, holding of
IP, etc.
Applicable legislationLaw of 17 December 2010
Part I (“UCITS Law”)
Law of 17 December 2010
Part II (“UCI Law”)
Law of 13 February 2007 (“SIF Law”)Law of 15 June 2004 (“SICAR Law”)Law of 23 July 2016 ("RAIF Law")Law of 11 May 2007 (“SPF Law”)Law of 22 March 2004 (“Securitization Law”)Law of 10 August 1915 ("Company Law")Law of 10 August 1915 (“1915 Law”)
Authorisation and supervision by the CSSFYesYesYesYesNoNoNo (unless continuous issues of
securities to the public)
NoNo
Qualification as an AIFNoAlways an AIF.Yes, unless exempt.
It is exempt if it does not raise capital from a number of
investors, with a
view to investing it
in accordance with a
defined investment
policy for the benefit
of those investors.
Yes, unless exempt.
It is exempt if it does
not raise capital
from a number of
investors, with a
view to investing it
in accordance with a
defined investment
policy for the benefit
of those investors.
Always an AIFIn principle, no
(as it would not
be considered as
“raising” capital from
a number of investors
as the structure
generally serves for
the investment of the
private wealth of a
“pre-existing group”
(as defined in the
Esma guidelines on
key concepts of the
AIFMD)).
No, in case
• such vehicle
meets the definition of
“securitisation special
purpose vehicle or
securitisation SPV”
under the AIFM Law;
• it issues
collateralised debt
obligations;
• it only issues debt
instruments;
• such entity is not
managed according to
an investment policy
within the meaning of
the AIFM Law.
Non-AIF, unless
activities fall within
the scope of article 1
(39) of the AIFM Law.
Non-AIF, unless
activities fall within
the scope of article 1
(39) of the AIFM Law.
Exemption
from AIFMD
full regime
under lighter
regime (AIFMD
registration
regime)
Not applicable.Possible.Possible.Possible.No.Not applicable.Possible.Possible.Possible.
External
authorised
AIFM
requirement
Not applicable.Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Always required.Not applicable.Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Required in case the
entity is an AIF that
is not self-managed
and above the AIFMD
threshold.
Eligible investorsUnrestricted.Unrestricted.Well-informed investorsWell-informed investorsWell-informed investors.Restricted to:
• natural persons
acting in the context
of the management of
their personal wealth;
• management
entities acting solely
in the interest of
the private wealth
(e.g. trusts, private
foundations); and
• intermediaries
acting for the
account of the above
mentioned eligible
investors (e.g. bank
acting under a
fiduciary agreement).
Unrestricted.Unrestricted.Unrestricted.
Eligible assetsRestricted to
transferable securities
admitted or dealt on
a regulated market,
investment funds,
financial derivative
instruments, cash
and money market
instruments that are
in compliance with
article 41 of the Ucits
law and the relevant
EU directives and
regulations.
Please note that the
eligibility of the asset
must be ascertained
on a case-by-case
basis in view of the
applicable laws and
regulatory practice.
Unrestricted.
The investment
objective and strategy
of the fund is subject
to the prior approval
of the CSSF.
Unrestricted.Restricted to investments in securities representing risk capital.
According to the CSSF Circular 06/241, investment in risk capital is to be understood as the direct or indirect contribution of assets to entities in view of their launch, their development or their listing on a stock exchange.
The SICAR is not allowed to invest directly in real estate (except for its own use or through its participations).
Unrestricted, unless it invests in a portfolio of risk capital (such as a Sicar).Restricted to acquisition, detention, management and realization of financial assets.
The SPF is not allowed to carry out commercial activities or to hold directly real estate (except for its own use or through its participations).
Unrestricted.
Securitization of any kind of risks relating to claims, other assets, or obligations assumed by third parties or inherent to all or part of the activities of third parties.
Unrestricted.Unrestricted.
Risk diversification requirementsRisk diversification requirements are provided by articles 42 et seq. of the UCITS Law, e.g. (not exhaustive):
- a UCITS may invest no more than 10% of its assets in transferable securities or money market instruments issued by the same body;
- a UCITS may not invest more than 20% of its net assets in deposits made with the same body;
- the global exposure relating to derivative instruments does not exceed the total net value of the UCITS portfolio.
Risk diversification requirements are defined by IML Circular 91/75 (as amended by CSSF Circular 05/177). Such requirements are less stringent than the ones applicable to UCITS.
In particular, a UCI is not allowed to invest more than 20% of its net assets in securities issued by any one issuer.
Specific restrictions concerning funds adopting an alternative investment strategy are contained in CSSF Circular n° 02/80.
Risk diversification requirements are
defined by CSSF Circular n° 07/309.
Such requirements are less stringent
than the ones applicable to UCITS
and UCI.
In particular, a SIF is not allowed to
invest more than 30% of its net
assets in securities of the same type
of issuer.
Restricted to
investments
in securities
representing risk
capital.
According to the
CSSF Circular
06/241, investment
in risk capital is to
be understood as
the direct or indirect
contribution of assets
to entities in view
of their launch, their
development or their
listing on a stock
exchange.
The SICAR is not
allowed to invest
directly in real estate
(except for its own
use or through its
participations).
Unrestricted, unless it
invests in a portfolio of risk
capital (such as a Sicar).
Restricted to
acquisition, detention,
management and
realisation of financial
assets.
The SPF is not
allowed to carry out
commercial activities
or to hold directly real
estate (except for its
own use or through its
participations).
Unrestricted.
Securitisation of any
kind of risks relating
to claims, other
assets, or obligations
assumed by third
parties or inherent
to all or part of the
activities of third
parties.
Unrestricted.Unrestricted.
Legal FormForm • FCP
• SICAV (SA)
• SICAF (SA,SCA)
All of these entities
must be open-ended.
• FCP
• SICAV (SA)
• SICAF (SA, Sàrl,
SCA, SCS, SCSp)
The entities may be
open-ended or closed-ended.
• FCP
• SICAV (SA, Sàrl,
SCA, SCoSA, SCS,
SCSp)
• SICAF (SA, Sàrl,
SCA, SCoSA, SCS,
SCSp)
The entities may be
open-ended or closed-ended.
• SA
• Sàrl
• SCA
• SCS
• SCSp
• SCoSA
The entities may be
open-ended or closed-ended.
• FCP
• SICAV (SA, Sàrl, SCA,
SCoSA, SCS, SCSp)
• SICAF (SA, Sàrl, SCA,
SCoSA, SCS, SCSp)
The entities may be openended
or closed-ended.
• SA
• Sàrl
• SCA
• SCoSA
A securitisation
vehicle may be set
up in the form of a
company (SA, Sàrl,
SCA, SCoSA) or a
fund consisting of
one or several coownerships
or one
or several fiduciary
estates and managed
by a management
company.
• SCS
• SCSp
• SA, Sàrl, SCA
• SAS
• SCoSA
• SCS
• SCSp
Umbrella structureYesYesYesYesYesNoYesNoNo
Capital requirements• FCP:
EUR 1,250,000 to be
reached no later than
6 months following
the authorisation by
the CSSF.
• Self managed
SICAV / SICAF:
EUR 300,000 at the
date of authorisation
and EUR 1,250,000
within 6 months
following its
authorisation.
• FCP:
EUR 1,250,000 to be
reached no later than
6 months following
the authorisation by
the CSSF.
• Self managed
SICAV / SICAF:
EUR 300,000 at the
date of authorisation
and EUR 1,250,000
within 6 months
following its
authorisation.
EUR 1,250,000 to be
reached no later than
12 months following
the authorisation by
the CSSF.
EUR 1,000,000 to be
reached no later than
12 months following
the auhorisation by
the CSSF.
• FCP:
EUR 1,250,000 to be
reached within 12 months
from the entry into force
of the management
regulations.
• SICAV:
EUR 1,250,000 to be
reached within 12 months
from the incorporation of
the SICAV.
Depends on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
• SCoSA: no
minimum capital
If the securitisation
vehicle is set up as a
company, it depends
on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
If the securitisation
vehicle is set up as
a fund, there is no
minimum capital
requirement.
No minimum capital requirement.Depends on the form:
• SA / SCA: EUR
30,000
• Sàrl: EUR 12,000
No minimum capital
requirement for other
legal forms.
Required Luxembourg service providers• Management
company in case of
an FCP.
• Depositary
institution.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Management
company in case of
an FCP.
• Depositary
institution.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
Management
company in case of
an FCP.
• Depositary bank
or professional of
the financial sector
providing depositary
services, subject to
conditions.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Depositary bank
or professional of
the financial sector
providing depositary
services, subject to
conditions.
• Administrative
agent.
• Registrar and
Transfer Agent.
• Approved
statutory auditor.
• Management company
in case of an FCP.
• Depositary bank
or professional of the
financial sector providing
depositary services, subject
to conditions.
• Administrative agent.
• Registrar and Transfer
Agent.
• Approved statutory
auditor.
Registered auditor in
principle not required
unless two of the
following criteria are
met: (i) net turnover
above EUR 8.8 million,
(ii) balance sheet
above EUR 4.4 million
and (iii) average
number of employees
above 50.
However, depending
on the legal form
of the company,
there may be an
obligation to appoint
a commissaire aux
comptes.
• Alternative
Investment Fund
Manager (if the
securitisation vehicle
qualifies as an AIF).
• Management
company (if the
securitisation vehicle
is set up in the form
of a fund).
• Independent
auditor.
• No depository
institution (unless for
regulated securisation
vehicles).
• No administrative
agent.
For SCS:
• Alternative
Investment Fund
Manager (if the SCS
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCS qualifies
as an AIF and is
managed by a duly
authorised AIFM).
For SCSp:
• Alternative
Investment Fund
Manager (if the SCSp
qualifies as an AIF).
• No requirement
to appoint a
depositary (except
if the SCSp qualifies
as an AIF and is
managed by a duly
authorised AIFM).
Registered auditor in
principle not required
unless the company
is an AIF managed
by an AIFM with AUM
above the threshold
or two of the
following criteria are
met: (i) net turnover
above EUR 8.8 million,
(ii) balance sheet
above EUR 4.4 million
and (iii) average
number of employees
above 50.
However, depending
on the legal form
of the company,
there may be an
obligation to appoint
a commissaire aux
comptes.
Possibility of listingYesYesYesYes, but difficult in practice.YesNoNo. In principle no. The
SCS/SCSp may
however issue debt
securities that are
eligible to be listed on
the stock exchange.
Yes
European passportYes.No, unless it falls under the scope of the full AIFMD regimeNo unless it falls under the scope of the full AIFMD regimeNo, unless it falls under the scope of the full AIFMD regime.YesNo
No, unless it falls under the scope of the full AIFMD regime.Non-AIF, unless activities fall within the scop of article 1 (39) of the AIFM Law. No, unless it falls under the scope of the full AIFMD regime.
Net asset value (NAV) calculation and redemption policyTThe UCITS must make
public the issue, sale
and repurchase price
of their units each
time they issue, sell
and repurchase their
units, and at least
twice a month.
The UCIs must make
public the issue, sale
and repurchase price
of their units each
time they issue, sell
and repurchase their
units, and at least
once a month.
At least once a year for reporting
purposes.
Not required. At least once a year for reporting purposes.Not required. Not required. Not required.Not required.
Corporate income taxNo corporate income taxNo corporate income taxNo corporate income taxGeneral aggregate ate: 24.94%

In certain cases,
reduced corporate
income tax rates may apply. Income derived from transferable
securities (e.g.
dividends received
and capital gains
realised on the sale of shares) is exempt. Income on cash held for the purpose of a future investment is also exempt (for one year).
No income tax, unless investing only in risk capital, then SICAR tax regime applicable.No corporate income tax• General
aggregate rate
for securitisation
companies: 24.94%.

Securitisation
vehicles should be
able to deduct from their gross profits their operational costs
and the dividends or interests distributed to the shareholders / creditors. Therefore securitisation
companies should not generate significant taxable profits and should therefore to a large extent be tax neutral.
No corporate income tax applicable. Municipal business tax of 6.75% applicable in very limited circumstances,
namely in case the
SCS/SCSp (i) carries out a commercial
activity or (ii) is
deemed to carry out a commercial activity.

A SCS/ SCSp is
deemed to carry out a commercial activity if its general partner is a
Luxembourg public or private limited liability company holding at least 5% of the partnership interests.

With a proper
structuring of the
GPs partnership
interest it should be possible to avoid the deemed commercial characterisation of
the SCS/SCSp.
General aggregate
rate: 24.94%, but
100% exemption for
dividends, liquidation
proceeds and capital
gains from qualifying
participations.
Subscription tax• Rate: 0.05% of
the NAV annually.
• Reduction: 0.01%
of the NAV annually in
certain specific cases.
• Tax exemptions:
special institutional
money market cash
funds, special pension
funds (including
pension pooling
vehicles) and funds
investing in other
funds which are
already subject to
subscription tax.
• Rate: 0.05% of
the NAV annually.
• Reduction: 0.01%
of the NAV annually in
certain specific cases.
• Tax exemptions:
special institutional
money market cash
funds, special pension
funds (including
pension pooling
vehicles) and funds
investing in other
funds which are
already subject to
subscription tax.
• Rate: 0.01% of
the NAV annually.
• Tax exemptions:
certain money market and pension funds
or SIFs investing in
other funds which
are already subject to subscription tax.
No subscription tax.• Rate: 0.01% of the NAV annually.
• Exemptions apply.
Annual subscription
tax of 0.25% on the
amount of paid up
capital and issue
premium (if any).
No subscription tax.No subscription tax.No subscription tax.
Wealth taxNo wealth tax.No wealth tax.No wealth tax.No wealth tax.No wealth taxNo wealth tax.No wealth tax.No wealth tax.0.5% on the NAV on 1 January.

Since 2017, this
minimum net wealth tax for holding and
finance companies
(known as the
Soparfis)—the fixed financial assets, intercompany loans,
transferable securities
and cash at bank of which exceed both 90% of their gross assets and EUR 350,000—is fixed at EUR 4,815 per year.

The minimum net
wealth tax for all other corporations has not changed; in other words, it is EUR 535 for companies with a
total balance sheet up to EUR 350,000.
Withholding tax on dividends / interests and capital gainsNot subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax.Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax except
if EU Savings Directive applies.
Not subject to withholding tax. Dividends distributed
by a Luxembourg
company are in
principle subject to
withholding tax at a rate of 15%, unless a domestic law exemption or a lower tax treaty rate applies.
Benefit from double tax treaty network• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
• SICAV/SICAF:
Limited to certain
double tax treaties
(see circular L.G.
-A n°61 of the tax
administration of 8
December 2017).
• FCP: see circular
L.G.-A n°61 of the tax administration of 8 December 2017.
Yes in case the
SICAR is set-up as
a corporate entity
(except if set-up
under the form of a SCS/SCSp).
• RAIFs investing in a portfolfio of risk capital (such as a SICAR)
Access if set-up as a corporate entity (except if set-up under the form of a SCS/SCSp).

• RAIFs not investing in
a portfolio of risk capital (such as a SICAR), but setup
as:
SICAV / SICAF: Limited to
certain double tax treaties
(see circular L.G. -A n°61 of
the tax administration of 8
December 2017).
FCP: see circular
L.G.-A n°61 of the tax
administration of 8
December 2017.
NoYes for securitisation
companies.
NoYes
Benefit from the EU Parent Subsidiary DirectiveNoNoNoIn principle yes, but
certain jurisdictions
where the target
companies are
located may
challenge the
application of the
directive.
No, unless RAIF that
invests in a portfolio of risk
capital (such as a SICAR).
NoYesNoYes
Thin capitalization rules (debt-to-equity ratio)Borrowings of up to 10% of net assets to finance redemptions (it should be a short
term borrowing
and cannot be for
investment purposes) or to buy real estate
for its business.
The total borrowing
under the above may not exceed 15% of net assets.
Borrowings of
up to 25% of net
assets without any
restrictions are
allowed.
No debt-to-equity ratio.No debt-to-equity ratio.No debt-to-equity ratio.Tax of 0.25% on the debt that exceeds 8 times the paid-up capital increased by the issue premium.No debt-to-equity ratio.No debt-to-equity ratio.No provision in Luxembourg law.
However, there is a specific administrative practice.